Good Afternoon, It has been a while, but i have been researching on the COT Reoprt and I will say I learned alot. With all that being said lets get right down to business...
We have two patterns presenting not including what the pattern software has picked up. We have a Bearish Bat and a Bearish Deep 222 pattern. i will be looking at both patterns for completion but leaning more toward the Bat pattern as the HSI and RSI indicators still have some ways to move before the Patterns are tradable and if thats the case then i think the bat pattern might throw both of those indicators into their extreme positions.
now on to the exciting stuff the COT Analysis. the Cot is a list of the major players and where their money is located. the report is broken down into 3 big categories. Non-Commercial, Commercial, and Non-Reportable. After reading a few books on the subject i can safely say we want to trade against the big banks... now this is a major contraian belief to what the majority of traders are taught. well the the Big Commercials use their positions to hedge against losses and they do this by "locking" in a particular Price/ Rate. How does this work... well lets say our bank/ business needs to transfer money from their international store for example Walmart and they want to book in those profits but the exchange rate betwen the US and the UK flucuates alot! well us as forex traders make a profit/ loss off the incremental small changes and we either win hundreds if not thousands of dollars and thats will relatively small accounts. Now a Big Commercial Like Walmart has to move hundreds of millions of dollars over and those small fluuations in price could eat up a ton of profits. So, walmart hedges the currency to lock in a particular exchange rate and for example they buy the pound and sell the dollar. so now its payday Walmart needs their moolah so its time to scale that money in and out back into the USD. they cant do it all at once becasue if so they will throw the market out of wack and crash the economy. so they scale their profits back. lets say the pound gained strength durring that time in the trade it self walmart is winning the trade, but their overall profit is getting eaten up by the exchange rate. so they win. But lets say the dollar gains strength well walmart will get more money on the exchange to off set the loss from the trade. so either way they win. I will be adding more fundamentals to my reports in the future!
Then non-reportables which is us and we do what we want as retail traders we buy with walmart or sell against them. on rare occasions do our numbers really make a difference.
So with all that being said Keep an eye out for GBP CHF to drop in the next few days if not weeks. the Commercials on the Pound just surpassed the Non-commercials in buying the pound and the Non-Commercials just surpassed the commercials on buying the CHF.
on the pound here are the numbers in Net Positions
GBP
Commercials= 35,289 Long
Non-commercial= (22,257)
CHF Net Positions
Commercials= (6,846)
Non-Commercials= 8, 739
This will be an interesting pair to see as on the CHF the Cross just happened and on the COT index the Non-Commercials are sitting at 96 and the Commercials are sitting at 4 which are extremes for the COT Index!!! I will be looking at CHF pairs to trade... and to be honest i think this pair is the last pair to revers as the Euro Swiss has turned and the USD/ CHF has already kinda turned!
We have two patterns presenting not including what the pattern software has picked up. We have a Bearish Bat and a Bearish Deep 222 pattern. i will be looking at both patterns for completion but leaning more toward the Bat pattern as the HSI and RSI indicators still have some ways to move before the Patterns are tradable and if thats the case then i think the bat pattern might throw both of those indicators into their extreme positions.
now on to the exciting stuff the COT Analysis. the Cot is a list of the major players and where their money is located. the report is broken down into 3 big categories. Non-Commercial, Commercial, and Non-Reportable. After reading a few books on the subject i can safely say we want to trade against the big banks... now this is a major contraian belief to what the majority of traders are taught. well the the Big Commercials use their positions to hedge against losses and they do this by "locking" in a particular Price/ Rate. How does this work... well lets say our bank/ business needs to transfer money from their international store for example Walmart and they want to book in those profits but the exchange rate betwen the US and the UK flucuates alot! well us as forex traders make a profit/ loss off the incremental small changes and we either win hundreds if not thousands of dollars and thats will relatively small accounts. Now a Big Commercial Like Walmart has to move hundreds of millions of dollars over and those small fluuations in price could eat up a ton of profits. So, walmart hedges the currency to lock in a particular exchange rate and for example they buy the pound and sell the dollar. so now its payday Walmart needs their moolah so its time to scale that money in and out back into the USD. they cant do it all at once becasue if so they will throw the market out of wack and crash the economy. so they scale their profits back. lets say the pound gained strength durring that time in the trade it self walmart is winning the trade, but their overall profit is getting eaten up by the exchange rate. so they win. But lets say the dollar gains strength well walmart will get more money on the exchange to off set the loss from the trade. so either way they win. I will be adding more fundamentals to my reports in the future!
Then non-reportables which is us and we do what we want as retail traders we buy with walmart or sell against them. on rare occasions do our numbers really make a difference.
So with all that being said Keep an eye out for GBP CHF to drop in the next few days if not weeks. the Commercials on the Pound just surpassed the Non-commercials in buying the pound and the Non-Commercials just surpassed the commercials on buying the CHF.
on the pound here are the numbers in Net Positions
GBP
Commercials= 35,289 Long
Non-commercial= (22,257)
CHF Net Positions
Commercials= (6,846)
Non-Commercials= 8, 739
This will be an interesting pair to see as on the CHF the Cross just happened and on the COT index the Non-Commercials are sitting at 96 and the Commercials are sitting at 4 which are extremes for the COT Index!!! I will be looking at CHF pairs to trade... and to be honest i think this pair is the last pair to revers as the Euro Swiss has turned and the USD/ CHF has already kinda turned!